Lenihan says plan will 'end uncertainty'
Minister denies EU forced compromise
Published 09/09/2010 | 05:00
FINANCE Minister Brian Lenihan last night insisted the Government's decision to split Anglo Irish Bank into two parts will provide certainty about the bank's future.
The minister denied the compromise plan was forced on the Coalition by the European Union.
But the Government was unable to say what the plan would cost or how long an "orderly workout" of the bank's loans would take.
Pressed on a timeframe for the wind-down, Mr Lenihan said it would be "difficult to see it going beyond 15 years".
In an obvious dig at those who said the bank could be wound down more quickly, he added that it wasn't possible to "pluck a figure out of the air".
Mr Lenihan admitted the new Anglo proposal was not a "silver bullet" to restore international confidence.
"I think it will take a number of steps to reassure the markets," he said.
But he added that finding a resolution to what he called "our most distressed institution" was essential to restoring confidence.
The Finance Minister said there was "no difference" with the European Commission or with other EU finance ministers on the plan.
Taoiseach Brian Cowen said the final bill for Anglo would be known by the end of October -- after detailed work by Financial Regulator Matthew Elderfield.
The Government was anxious to bring finality to this matter and the announcement was a "strategic decision".
Mr Cowen refused to be go into detail of the overall cost, saying it was not helpful to have figures bandied about.
Anglo management has estimated the cost at €25bn but ratings agency Standard & Poors says it could be €35bn.
Under the plan, the €36bn worth of business loans held by Anglo will go into an Asset Recovery Bank and €56bn of deposits will go into a Funding Bank. Already, €36bn worth of loans is earmarked for transfer to the National Asset Management Agency.
The Government's proposal is a variation on the so-called good bank-bad bank plan from Anglo management. The key difference is that the bank will not continue to lend, unless it is to aid firms in repaying existing borrowings in the long run.
After opposing the Anglo management's plan, the Green Party said it was satisfied with the outcome.
"We are satisfied it does not endorse the Anglo plan. We didn't see that as a viable option," a spokesman said.
But the Greens didn't get all their demands as the junior coalition partners had said it would be preferable to have the bank wound down over four to five years, and did not put forward the compromise.
Fine Gael finance spokesman Michael Noonan claimed the Government's decision was a "fudge" and would bring no certainty, adding: "There's no relief for the taxpayer.
"There are so many questions you could ask about this. It makes it more uncertain than anything," he said.
Labour Party finance spokesperson Joan Burton said: "Having spent two years insisting that Anglo must continue in its present form, the Government has finally abandoned their failed policy.
"Yet, even as they U-turn, the announcement has left a whole series of questions unanswered about the future of Anglo at a time when the markets urgently require clarity."
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